Pensonic plans Asean presence to boost export revenue

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This article first appeared in The Edge Financial Daily, on November 18, 2015.


GEORGE TOWN: Electrical home appliance maker Pensonic Holdings Bhd, which saw its first quarter net profit rise 2.6% to RM2.26 million from RM2.2 million a year ago, plans to strengthen its presence in Asean to boost its export revenue, which now accounts for 30% of the group’s total revenue.

Its group managing director Vincent Chew said this would involve setting up representative offices in countries such as Vietnam, Thailand and Indonesia in the current financial year ending May 31, 2016 (FY16) to support its distribution network .

“We will also look to grow our contribution from the Middle East market,” he told reporters yesterday.

For the first financial quarter ended Aug 31, 2015 (1QFY16), Pensonic reported a net profit of RM2.26 million, 3% higher than 1QFY15 net profit of RM2.2 million.

Revenue for 1QFY16, however, fell 6.6% to RM98.94 million from RM106.03 million in 1QFY15, which the group attributed to the slowdown in the local economy and the weakening of the ringgit. Year to date (YTD), the local currency has depreciated 25.3% against the US dollar.

However, the slowdown in the local economy has not hindered the group from growing its presence in the domestic market, which is still its largest revenue contributor.

For one, Pensonic has been working together with a few local property developers in furnishing their housing projects with basic home electrical appliances.

“We are currently working with a few developers based in Penang,

Perak, and the east coast region. Besides that, we are providing our appliances in smaller homestay motel establishments, which are mushrooming in the country,” said Vincent.

The group has also invested RM50 million to build a new headquarters (HQ) in Bukit Minyak, Simpang Ampat, Penang, which sprawls across six acres (2.43ha) and houses the group’s integrated research and development centre.

“With the substantial investment in our new HQ, we will be prudent on new business investments in the next two years at [the] least.

“With the current challenging economic conditions, we will implement stringent control of cost structures. This would not involve any employee retrenchment, but instead focuses more on improving operation efficiency,” said Vincent.

Pensonic has also embarked on a diversification strategy by developing a new segment of products, such as the newly launched Fonebud Essential Plus smartphone accessory, a multipurpose power bank that functions as a backup phone.

Pensonic group chief executive officer Dixon Chew said it is too soon to predict revenue contributions from Fonebud.

“It will probably take three to five years to see viable results, not only from our new product but also from the strengthening of our export and local markets. Just like the Pensonic brand name, which we have built [over] these past 33 years, I believe in years to come, we will able to see more significant contributions from these strategies we have put in place,” Dixon said.

Pensonic shares closed unchanged at 62.5 sen yesterday, with a market value of RM81.04 million. YTD, its share price has risen 45.4%.